Posts Tagged ‘Employee Misclassification’

Bill Clinton used to say that (fill in the blank) would last “until the last dog dies.” Well, friends, today’s topic is all about a dog that won’t die, absolutely refuses to die, will outlive us all, cannot be killed. You get the point.

Eleven years ago (I almost feel like writing “in a galaxy far away”), the Insider started to track the illegal practice of misclassifying employees. We found that, while it was almost ubiquitous in the construction industry, its tentacles reached into other industries as well. We saw it as widespread right in our backyard of Massachusetts. We found a 2005 paper addressing the issue in the Maine construction industry published by the Labor and Worklife Program, Harvard Law School and the Harvard School of Public Health. We conducted employer seminars on it in many states.

At the time, we thought it was a pretty egregious practice that would be hard for state Attorneys General to ignore, so it would probably get fixed lickety split. We were half right. It was egregious, and Ags from the majority of states published stern regulations, as did state Departments of Insurance. But “fixed?” Nope.

Then, in 2005, a national class-action lawsuit with hundreds of plaintiffs from 30 states was filed against FedEx Ground alleging that workers were misclassified as independent contractors. This was mother’s milk to us. We had our bogeyman, and his name was Fedex. Since then, we’ve written about this Dorian Grey issue ten times. Here’s an example from 2006

Fast forward to now. Specifically, to Wall Street Journal writer Laura Weber’s 30 June story “Bosses Reclassify Workers To Cut Costs.” Ms. Weber’s story manages to be both objective reporting and poignant at the same time. Here’s an exccerpt:

Employers have long shifted work from employees to independent contractors, often relabeling the workers and slightly altering the conditions of their work, court documents and settlements indicate. Now, businesses are turning to other kinds of employment relationships, such as setting up workers as franchisees or owners of limited liability companies, which helps to shield businesses from tax and labor statutes.

In response, some state and federal agencies are aggressively clamping down on such arrangements, passing local legislation, filing briefs in workers’ own lawsuits, and closely tracking the spread of what they see as questionable employment models.

All this is happening against the backdrop of a broader shifting of risk from employers to workers, who shoulder an increasing share of responsibility for everything from health-insurance premiums to retirement income to job security. Alleged misclassification of workers has been one of the primary battlegrounds of this shift, leading to high-profile lawsuits against Uber Technologies Inc. and FedEx Corp., among others. Both have recently lost or settled big cases. Uber is appealing one decision, and FedEx settled in California for $228 million but is continuing to challenge classification lawsuits in other states.

Today I’m an employee; tomorrow I’m an Independent Contractor; the next day a Franchisee, or, oh, I don’t know, CEO of my own one-person LLC. Not only will the dog not die, his bark is really loud.

Very smart people are cooking up these schemes. I ask you – Do you think they are: